American LMS

If you have been keeping up on our blog at American loss mitigation Services then you will have already read Parts I and II in this series.  What we are addressing today is the final key to finding buyers and keeping them whether you are a homeowner, investor or Realtor.  When dealing with a short sale many believe that “closing” the deal is a problem.  Personally, having had both traditional and short sale homes for sale, I prefer a short sale over a traditional.  However, some find it difficult.  Let’s discuss some ways to make this a less cumbersome process and ultimately create a more secure buyer. We need to create a NEW belief system!

The first thing I MUST say is this – THERE ARE BUYERS OUT THERE!!!  Though most of our teams use a special program we developed for creating an endless buyers list, some of our teams prefer the good ole fashion way and they do very well.  Two of our strongest teams come to mind right here in Florida where I am!  The first thing you have to keep reminding yourself of is that there are buyers out there.  If one does not fit your criteria than let them know why.  For example, if you are trying to do an ABBC closing as an investor and you are trying to avoid FHA than put NO FHA on your listing and marketing material.  If you already know the price you can accept then make sure you reflect that in your marketing as well.  A simple line such as – “Bank is waiting for offer of $231k”, “Bank has agreed to take offer of $231k” or “Already Bank Approved”.  There are a number of different ways to present to your buyer information that will encourage them to put an offer in on the property.

If you have not yet completed the negotiations which is USUALLY the case, then you can use lines like “Priced to Sell”, “Deeply Discounted Short Sale”, “Bring Any and All Offers” (be careful with this one as I will explain later), “Short Sale with Negotiations Already Underway”, “Bring Cash Offer and Deeper Discount WILL Be Considered”, “Bank Says Bring All Offers Ready for Quick Close” (Also be careful as I will explain time frame later),”Investor Special or Handyman Special” (use this only if the house is in need of 15k + in repairs) , or “Deeply Discounted for First Time Home Buyer” (Use this where FHA is OKAY).  The problem that some people see with these above is they seemingly eliminate one group or another.  This is OKAY!  It is entirely possible that you won’t find a buyer for your property.  With banks becoming more comfortable with short sales (though should have happened 2 years ago) and not taking so many back as REO you have a little less competition as before.  If you are able to sell FHA remember that FHA borrowers will get an 8k tax credit through November 30th of this year.

When selling a home you have to think of it as a painting you just finished.  Not everyone is going to enjoy the art or appreciate the artists taste.  However, there will be takers for that piece of art and at the price you want to sell the painting for.  The key is finding that person.  This can be done by putting a sign up “House For Sale” in a neighborhood that is high end but is primarily rental.  If you target this type of area than you are ensuring that you will capture someone with cash or a hefty down payment that doesn’t currently own a home.  You can also put a sign up in a high end shopping area.  You can purchase the sign for under $10 with a frame at Home Depot, Lowes or any hardware store.  Be sure when placing your signs you include ALL of the following:

• Beds/Bath
• Type i.e. Single Family/Multi Family/Condo etc
• One of the best positives i.e. Pool, Gated Community, Oversized Lot, Finished Basement.
• Address – use this EVEN if the sign is in your area.  Not everyone has time to go RIGHT at that moment.
• PHONE NUMBER – Make sure, if you forget everything else, DO NOT FORGET THE PHONE NUMBER!!!  You would be surprised how many for sale signs I have seen with NO NUMBER…this is a BIG mistake!
• Catch Phrase – You can use one from above like “Priced to Sell” or “Investors Special”

Not necessarily in that order.  Signs come in all sizes and you may have a budget you are working with so squeeze in what you can where you can!  Now this just gets you as far as getting the buyers to come.  What you do when you get the contract is a whole different ball game.  Using the tools and tips above will ensure you get a buyer more in line with what you were looking for.

When you receive the contract DO NOT BE AFRAID to counter.  Our real estate market was built on good ole fashion bartering.  If they have concessions on their offer counter them with zero concessions and 5k more on the contract.  The worse they can do is say no!  I always tell our teams to BE CONFIDENT BUT NOT GREEDY.  There is a fine line between the two.  If you have an offer in your hands that meets all of your requirements and needs, plus a little, then run with it.  You don’t have to counter EVERY buyer.  You do, however, need to consider what you need before you accept and at the very least, attempt a counter if it’s needed.  You cannot be afraid.  This is where most people go wrong.

In fact, I know this from experience.  We have had a few homes that I just could NOT wait to get off our plate.  The problem you create when you accept things you don’t have to is a state of mind.  This is so hard to explain on paper but I will try my best!  The best way is to give an example.  I had an offer on one of our Georgia properties that came from a homebuyer intending to use the home for his personal residence.  I, of all people, should have seen trouble coming when he practically submitted a short sale package WITH his offer.  He had a list of sex offenders for crying out loud.  He had EVERY area negative including the fact that construction was taking place FIVE miles away.  This negative was on his “list of inconveniences”!!!  Because we had this property in the works for so long, primarily due to the Realtor and the bank, I just wanted to see it close. We all did!  The offer was about 3k too low and he was asking for $3,500 in concessions.  This wasn’t too terribly bad and I really just wanted this nightmare of a deal to go away.  I took his offer rather quickly and basically thought to myself “good written”!  The moment I did that I gave him a sort of “validation” that he was savvy (he was SO NOT) and that I was desperate (True I was anxious but NOT desperate).  From that point forward he demanded EVERYTHING under the sun!  There was a tractor on the property that he INSISTED should be part of the deal.  The he argued that the BEAUTIFUL bedroom suite that the homeowners had not yet moved was ALL HIS!  This went on and on until inspection.  He then decided, since the inspection revealed everything, repair wise, which we had disclosed, that the property, 1 week before the close, was worth 5k less.  Are you KIDDING ME???  Needless to say I let him walk.  The point here is I created, in him, a state of market.  By allowing him so much room I, in essence, told him it was a buyer’s market.

In my world, and should be yours from here on out, IT IS STILL A SELLERS MARKET!!!  You have a home that SOMEONE wants.  Put yourself in the shoes of an artist.  Don’t let your art slip through your fingers out of sheer desperation.  I am the one in the room that says BRING IT ON when faced with the most difficult of adversities.  I know there is something good coming to me.  I KNOW there is because I know that I live my life right and I know that I deserve nothing but good things.  I am not one of those sleazy people that steps on someone every chance they get…or even every now and again.  At American loss mitigation our motto has ALWAYS been win/win/win.  Everyone wins, INCLUDING THE SELLER, or no one wins.  We try every day to “take the high road” in all of our decisions.  If you live your life like that than KNOW that good things are coming.  Know that the buyer for YOUR BEAUTIFUL art is just around the corner.  If you think any other way you will allow someone else to think they have something YOU want instead of you having something THEY want!

Bottom line on closing – It’s psychology.  You have to tell yourself that you have something that someone wants and try to figure out who that “someone” is and where you might find them.  This weeds out the tire kickers!  In addition, when it comes time for that offer presentation, there will be no surprises as to what you want from them.

Before you sign that contract I will give you one last piece of CRUCIAL advice.  DISCLOSE EVERYTHING!!!  Haven’t started negotiations with the bank?  Tell the buyer this.  Let them know it could take up to 90 days to get an answer.  Are you half way through the process?  LET THEM KNOW!!  Tell them exactly where you are at and let them be fully aware of the time it might take.  If you think it will be 30 more days then say 60 days!  Under promise – Over deliver!  If you get it back sooner, excellent.  If the approval comes in 55 days you haven’t disappointed anyone.

If a buyer can only wait 30 days because of a lease obligation and they don’t have an alternative living arrangement than DO NOT accommodate them. You can’t! When dealing with banks you will get extremely frustrated getting across the point that you have a buyer that MUST close in a certain time. Whether true or not, they hear that line all day long! Unless you have spoken with the mitigator and they have clearly told you they will leave your file open for when you are ready, not likely but it does happen, than do not promise an approval letter in less than 30 days. Remember, also, that the buyer lender in most cases will wait to send to underwriting and do the final paperwork until the approval letter is received. The underwriting process alone can take 2 -3 weeks. If your buyer can only wait 30 days than simply let them go. Remember, it’s a sellers’ market. This should be your new mantra!

If you are doing an ABBC closing, LET THE BUYER know what your position is and what will occur.  There is NOTHING worse than a confused and uninformed buyer 3 days before closing.  Your deal will more than likely unravel unless you have a very clever way of LYING!  There is ALWAYS more chance of you getting caught up and things coming undone in the end if you don’t disclose than there is if you tell them RIGHT upfront!

So, in wrapping up, your main focuses in closing are:

• Target your buyers based on what you need
• Don’t be afraid to ask for more or counter the terms of an offer when it’s received.
• Stay in the mindset that you are the artist selling the painting that is JUST right for someone! Your new mantra is “It is a sellers’ market! It is MY market!”
• Disclose EVERYTHING and be honest about progress and process!
• Disclose Everything! Yes I said this again! It is extremely important so there are NO surprises at the end. If you are doing an ABBC closing it is NOT a bad idea to call or speak to the “C” buyer’s lender and explain the transaction and be sure there are no seasoning requirements. FHA is not the only lender that has seasoning requirements and if you are NOT prepared or aware you will be in for a surprise the week of the closing!

This article, Part III, is finally on paper…There will be a 25 question test tomorrow on this topic! Teasing! This was VERY long. However, there are so many ways to prepare for a closing and all areas are imperative to the successful close of the deal. Bottom line is to focus your efforts, keep a good mindset and be brutally honest. Do these and the buyer you do get will be that much stronger come time to close.

There are a few things that are key with any businesses success.  With short sales, just as any other business, the first thing you have to have is a vision or a goal.  Once you have this “vision” in your mind you can start to focus on how to get there.  The first rule in setting goals is to make the goal attainable.

I hear people say keep it realistic.  What is realistic?  Realistic is a relative term.  It changes depending on the person you ask.  So what I like to replace that with is the term attainable.  You know your limits better than anyone but you also know how hard you can push PAST those limits to succeed at something.  This is what I would consider attainable.  I know that I can get it done, reach the goal, even if it means pushing a little.  Once you have set your “attainable” goal you now need the key ingredients that any business needs to function.

What I have done is broken this down in a little outline format.  You need a product or service and you need a market to sell those products or services to.  That is where we will start our base foundation from.

Product or Service – In this case we are talking about a service – short sales.  The most important thing here is to KNOW the service you are pushing.  Make sure you are familiar with local foreclosure laws, the general process of a short sale with the bank, the pros AND cons of a short sale and the worst case scenario for your clients.  To do this you will need some sort of education, if you don’t know already, or education program.  Learning all of these things online can be cumbersome and time consuming.  Which leads us to time management.  You have to prioritize what is important so let’s jump right into the outline:

I.        Time Management Plan – How many hours can you devote a week to your new business

a.   Service – Set aside half of this time for education of the service you are offering initially and, since we are discussing short sales, make sure that you do this for at least two weeks.  After the 2nd week you can cut back to 25% of your time for two more weeks and then give yourself 10% of your time from that point forward for continuing education.  You also want to consider outsourcing some tasks here to make sure you don’t run out of time but remember to also budget for this.

b.   Sales – Initially you will have to familiarize yourself with your local market so a bit of this will be educational.  You will, over the first two weeks, want to lay out a plan of action while you are learning marketing techniques and your local market.  Once you have established that you will have to make sure you dedicate about 25% of your time from here on out to marketing and make sure you stay on top of it.  Remember to also use your budget as a guide here.  Lay out your plan and put it in writing.  If you are going to do offline marketing research sources that you can get your information from and how much will it cost.  If you are doing online marketing research the ways you can do this and set a schedule up to complete tasks every day to accomplish your 25% weekly.

II.        Budget – Determine how much money you can afford to put out BEFORE seeing a return on your investment.

a.   Service – Your time is valuable and some do not have as much as others.  Would it be easier to get a solid education package where most of the research has been done for you?  Also consider outsourcing of some things.  For example, if you are running around town collecting packages, attending bpo’s, inspecting houses, participating in the showings, staging properties, closings and general leg work will you have time to ALSO make calls to a bank?  Consider outsourcing some of these tasks like the negotiations or showings and staging props.  You will have to know how much the service will cost and do comparisons.  DO NOT just take the first company you look at.  Do your homework.  Your success depends on it!

b.   Sales – When it comes to budgeting for marketing I find that MANY make the mistake of putting too much out without the proper return.  When you first start out you want to expect NO MORE than a 1% conversion rate just to be on the safe side.  Once your marketing campaigns are well under way you can change these numbers.  DO NOT expect money in short sales to come for AT LEAST the first 4 months.  Sometimes this will be around 6 months depending on how long it takes you to get the docs from the first client and get them to the bank.  That will also depend on whether you are outsourcing or not.  If you anticipate doing everything yourself you can expect to be spread pretty thin.  This will affect your time management.  The two go hand in hand.  One will affect the other.

Now that you have both time and money managed you must manage yourself.  Create a daily “to do” list.  If you don’t finish what is on it move it to tomorrow’s list.  Get a phone log and log the calls you get and time spent and phone numbers.  Keep this close to the phone.  Most importantly, stay organized.  Develop a filing system and stick to it.  You should set aside time EVERY DAY to clear off your desk and plan for the next day.  I find that coming in the next day is MUCH more difficult than doing 30 minutes before I leave the office at the end of the day.  You know what your strengths and weaknesses are so work on your weaknesses and polish your strengths…if you know you are forgetful than have a dry erase board and a constant to do list so things don’t fall through the cracks.  Use outlook to schedule for you.  Some cell phones can sync with outlook I believe OR use your cell phone as a day runner or planner.  Just stay on top of things.

One of the most frustrating things with short sales but also the most exciting is the change of pace frequently.  One minute you could have nothing going on.  Ten minutes later you have booked yourself solid with to-do’s for the next 3 days.  Remember to stay focused and KEEP A LIST!!  I can’t stress that enough!  I have a dry erase board that takes up the large part of one wall in my office and a dry erase calendar.  They have BOTH proved INVALUABLE.  When I have a deal that has been approved I put on our dry erase board so that everyone knows we need to focus on scheduling and organizing the closings.  My to do list helps me stay focused on files.  In fact, I have a notebook that I keep my to do lists in dated 2 weeks out.  When I complete a day I add the new to do’s to the next list and then add the next date at the end of the two weeks.  That way if there is a specific date I need to get something done or schedule I have it already on my list for that day and not having to write it every day for the next week to the new daily list…hope that makes sense.

The key here is to stay organized, budget your money and, most importantly, budget your time!  Set your attainable goals for time periods.  What would you like to accomplish in 1 month, 2 months, 4 months, 6 months out?  Have them written down and put them on your board!  short sales can be very lucrative if you keep your ducks in a row and set goals that are reachable!  Don’t overspend or over extend yourself.  Any business is hard work but at the end of the day is WELL worth it!